Hewlett-Packard's (NYSE:HPQ) latest excuse for failure is an $8.8 billion write-down of Autonomy, the British software firm it bought two years ago, along with the claim that its management massively inflated that value in a willful attempt to deceive.
Needless to say, the Brits are not amused. Shareholders should not be, either.
Frankly, I was afraid something like this was in the offing. How is it that Autonomy was ripping you off, Ms. Whitman, when barely half of its shareholders responded positively to your initial tender? I wrote about Whitman's clear-out of Autonomy management back in May and noted, here, that cutting is cutting.
Meg Whitman has become the Charlie Sheen of Silicon Valley. She thinks she's "winning," and has a wealth of excuses as to why her team is tech's answer to the Kansas City Chiefs. It's amazing to me how, each time I point this out to readers here, HP fanbois immediately come out of the woodwork to defend her.
Take this September piece, focused on the intensifying gloom around the place and quoting Chris O'Brien of its hometown paper calling the company "beyond saving." Here's what one correspondent, who will go anonymous here, wrote in response:
Meg's barely been there for a year, and in that she's managed to meet her earnings guidance and set out an agenda for cutting costs and transforming HP's structure to be leaner. Whether it will be agile or under-equipped won't be known for a couple of years. But the idea that a company generating about $10 billion in annual cash flow is beyond saving is just ridiculous, in my opinion.
Since that article was written, HP is down another 34%.
Let me repeat this. Meg Whitman has no track record for turnarounds. She grew eBay when eBay was growing. She did nothing between then and her hiring at HP but get on corporate boards and run for Governor of California, losing to a man once dubbed "Governor Moonbeam," and decisively, wasting tens of millions of dollars in the process.
This company has hit the iceberg and the captain wants time. The only reason to buy HPQ stock today is in hopes of a forced acquisition by someone with a Clue. At its present price HP is selling at about 75% the value of one quarter's sales. If someone offers $30 billion for this mess, take it and run like you stole something.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.